The TJX Companies Inc. (TJX)
Update 4/4/2017: TSX rose after earnings were published and then began tracing a sideways correction. A downward move within the zig-zag pattern combined with tine decay and lower implied volatility brought the position to my target price, which is 25% of maximum potential profit. I exited.
At exit shares were up 1.7% over 42 days, or a +14% annual rate. The options position produced a 33.3% yield on debit for a +290% annual rate.
TSX publishes earnings on Wednesday before the opening bell.
I shall use the APR series of options, which trades for the last time 59 days hence, on April 21.
Implied volatility stands at 23%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.
TJX’s IV stands in the 40th percentile of its annual range and the 51st percentile of its most recent broad movement.
The price used for analysis was $76.17.
|Premium:||$4.20||Expire OTM||iron fly|
The premium is 57% of the width of the position’s wings.
The risk/reward ratio is 0.8:1.
Decision for My Account
I have entered a position on TJX as described above. The stock at the time of entry was priced at $76.25.
By Tim Bovee, Portland, Oregon, Feb. 21, 2017